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Analyst Blog

Shares of Cree, Inc. (CREE - Snapshot Report) have remained within a sideways range over the last 12 months. The company’s stock yielded a negative return of 1.62% compared to the S&P 500’s growth of 7.32% over the same period.

The negative return on the stock could be due to lower sales in the consumer lighting segment as well as a slowdown in its Power and Radio Frequency business.

Meanwhile, the company expanded its Essentia by Cree line of products with the introduction of the new LED Surface Wrap in a bid to bolster sales in the consumer lighting segment.

Features of the LED Surface Wrap

Efficacy: The new product gives out 115 lumens per watt, which is considered to be the best in its class.

Quality: The LED Surface Wrap emits clean white light with a low profile that scores over the harsh emissions of fluorescent tubes.

Easy to Install: The unit can be easily mounted on walls or ceilings.

Energy Saving: The unit offers energy savings through the use of an occupancy sensor.

Attractive Design: It has an attractive arc lens design that is aesthetically appealing.

Dimming: The product offers 0-10V dimming to 5%.

How this Product Fits Into Cree’s Growth Strategy?

As per a market study conducted by the U.S. Department of Energy, LED lighting is estimated to gain 84% of the general illumination market by 2030. This will cut down lighting energy consumption by a whopping 40% in that year alone. That translates to savings of over $26 billion as per current valuations of energy prices.

Given the fact that LED lighting is gradually gaining traction, Cree’s efforts to light up its revenues via the LED way is certainly a move in the right direction and is poised for growth in the years to come.

Intensifying Competition

We note that competition in LED products is intensifying with every passing day as the segment continues to gain traction. Some notable competitors in this field include Nichia, OSRAM, Philips and Samsung.

However, Cree’s focus on introducing innovative LED products augurs well for the company in the long run and positions the company in good stead amongst its peers.

Zacks Rank & Key Picks

At present, Cree has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology space are NVIDIA Corporation (NVDA - Analyst Report) , Tokyo Electron Limited (TOELY - Snapshot Report) and CACI International Inc. (CACI - Analyst Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Notably, earnings estimates for NVIDIA for the current year and the next have remained stable at $1.85 and $1.92, respectively, over the last 7 days. 

Earnings estimates for Tokyo Electron for the current year and the next have been revised to $1.46 and $1.60, respectively, over the last 7 days. 

Estimates for CACI for the current year and the next have remained stable at $6.24 and $6.73  respectively, over the last 7 days.

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